Texas Business Organizations Code

§ 21.552 — STANDING TO BRING PROCEEDING

BO § 21.552Title 2. CORPORATIONS · Ch. 21. FOR-PROFIT CORPORATIONS · Art. L. DERIVATIVE PROCEEDINGS

Statute text

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(a)Subject to Subsection (b), a shareholder may not institute or maintain a derivative proceeding unless:

(1)the shareholder:

(A)was a shareholder of the corporation at the time of the act or omission complained of; or

(B)became a shareholder by operation of law originating from a person that was a shareholder at the time of the act or omission complained of;

(2)the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation; and

(3)for a corporation with common shares listed on a national securities exchange or a corporation that has made an affirmative election to be governed by Section 21.419 and has 500 or more shareholders, at the time the derivative proceeding is instituted, the shareholder beneficially owns a number of the common shares sufficient to meet the required ownership threshold to institute a derivative proceeding in the right of the corporation identified in the corporation's certificate of formation or bylaws, provided that the required ownership threshold does not exceed three percent of the outstanding shares of the corporation.

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Legislative history

Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 63, eff. January 1, 2006. Acts 2011, 82nd Leg., R.S., Ch. 93 (S.B. 1568), Sec. 1, eff. September 1, 2011. Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 2, eff. September 1, 2019. Acts 2025, 89th Leg., R.S., Ch. 21 (S.B. 29), Sec. 13, eff. May 14, 2025.